I recently had a couple contact me in order to remortgage their current residential property, based in North West London. These clients were unmarried and had just had their second child together. They also had two buy to let properties in the background, although the husband had just set up a new limited company, which he wasn’t taking much income from.
Their existing mortgage was on a repayment basis and due to the nature of his income, my clients were currently relying predominantly on the wife’s income to support the household bills. However, she had only just returned to work from maternity leave and the couple had already used the majority of their savings at this point, as well as bearing the expense of the increased costs of having another child.
Because of this, affordability was a problem with most high street lenders, as a repayment mortgage would not be affordable while the husband was getting his business off the ground. This was certainly a worry for my clients who needed to support their growing family. Yet due to my excellent relationship with a diverse range of lenders, I was sure I could present their case in the best way to find the right solution.
I suggested my clients use the equity in the two buy to let properties, amounting to £279,500, which they could then use to have part of their residential mortgage on interest only. I was able to use 80% of the buy to let equity to calculate the interest only element with the remaining amount on repayment.
This would not only significantly reduce my clients’ monthly mortgage costs, but also meant they would be able to afford the repayment mortgage at a later date, once his income started to pick up again from the new limited company.
My clients were able to obtain a total mortgage of £311,000 with £223,600 of that on interest only and the rest on a repayment basis. I managed to secure this on a very competitive 2 year fixed rate of 1.49%.